Archives : MOODYS THUMBS UP TO MODINOMICS - 17/11/2017.

MOODY’S THUMBS UP TO MODINOMICS - 17/11/2017.

 

MARKET BOUNCES FROM BULLISH GAP.

 

International Rating Agency Moody’s upgraded India’s rating after a gap of 13 years citing Reforms undertaken by the current Government. Measures such as introduction of GST, Aadhar system of Biometric accounts, direct benefit transfer schemes and Recapitalisation of PSU banks were the chief reasons which prompted the upgrade. But before the upgrade, the market went lower on Wednesday and took support at the Bullish Gap between 32804-32670 for the Sensex and 10120-10104 for the Nifty which was ably supported by the presence of 50dma. A break of the last week’s low i.e. Sensex 32683 and Nifty 10094 will turn the intermediate trend down.



MOODY’S THUMBS UP TO MODINOMICS - 17/11/2017.

 

MARKET BOUNCES FROM BULLISH GAP.

 

International Rating Agency Moody’s upgraded India’s rating after a gap of 13 years citing Reforms undertaken by the current Government. Measures such as introduction of GST, Aadhar system of Biometric accounts, direct benefit transfer schemes and Recapitalisation of PSU banks were the chief reasons which prompted the upgrade. But before the upgrade, the market went lower on Wednesday and took support at the Bullish Gap between 32804-32670 for the Sensex and 10120-10104 for the Nifty which was ably supported by the presence of 50dma. A break of the last week’s low i.e. Sensex 32683 and Nifty 10094 will turn the intermediate trend down.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 33397, made a high of 33520, low of 32683 and closed the week at 33342. Thus it closed the week with a gain of 28 points. At the same time the Nifty opened the week at 10322, made a high of 10343, low of 10094 and closed the week at 10283. Thus the Nifty closed the week with a loss of 38 points.

 

On the daily charts, both the indices have formed a small black body Star. This is a neutral formation but it can have bearish implications if we form a bearish candle on Monday. On the weekly charts, Sensex has formed almost a Doji with a very long lower shadow whereas the Nifty has formed a Hammer formation which has a long lower shadow and even a small upper shadow. Thus candlestick study indicates a neutral to bullish bias in the near term.

 

As expected the indices went lower and took support at the critical Gap formed between Sensex 32804-32670 and Nifty 10120-10104. This gap was ably supported by the previous tops (Sensex – 32683 and Nifty – 10137) along with the 50dma. Sensex made a low of 32683 and Nifty 10094 before staging a bounce-back.

 

A break of the last week’s lows (Sensex 32683 and Nifty 10094) will turn the intermediate trend down and we will once again resume the Correction; the levels for which are placed at Sensex 32802-32474-32145 and Nifty 10183-10088-9993.

 

The key level to watch out for in this entire upward rally is the support taken at the higher bottom which is at Sensex 31128 and Nifty 9685. A break of this support will interrupt the higher top higher bottom formation sequence for the indices for the first time since December 2016. As a result, we will be looking at the Correction of the entire rally which started from Sensex 25717 and 7896 for the Nifty.

 

On the weekly formation, both the indices had completed a Cup and Handle formation and the targets are Sensex 34677-37554 and Nifty 10536-11413. If one considers the Cup and Handle formation of 7 years from 2007 to 2014, the target for that pattern falls at Sensex 34715 and Nifty 10462. The Golden Ratio target of the current pattern weekly pattern of 2 years is at Sensex 34677 and Nifty 10536. Thus in the medium term one can expect a test of the above targets i.e. Sensex 34677-34715 and Nifty 10462-10536.

 

MACD continues in its Sell mode despite being in the positive zone. Price ROC is negative and in Sell mode. RSI (53) still suggests bullish momentum. ADX has dropped to 19, which suggests that there is no clear trend. Directional Indicators have just given a Buy. MFI (45) suggests Negative Money Flow. OBV is moving lower but is yet to give a Sell signal. Thus Oscillators are suggesting a mixed bias this week.

 

This week, both the indices tested the medium term average of 50dma (Sensex – 32468 and Nifty – 10132) and bounced back. Both Sensex and Nifty continue to remain below the short term average of 20dma (Sensex – 33193 and Nifty – 10306), but they still continue to remain above the long term average of 200dma (Sensex – 30925 and Nifty – 9600).  Thus the trend in short term has turned down, whereas the trend in the medium term as well as the long term timeframe continues to remain Bullish.

 

Options data for November series indicate highest Call Open Interest is at the strike of 10500 whereas the highest Put build-up is at 10000. Thus Options data suggests a trading range with resistance coming at 10500 & support at 10000.

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Dalmia Bharat

3074

3011

3171

3275

Buy SRF

1773

1731

1838

1907

Buy TCS

2707

2655

2785

2867

Buy DLF

223

217

233

244

Buy Heidelberg Cem

167

162

175

184

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9988

10094

10178

10283

10384

10490

10589

Sensex

32312

32670

32995

33342

33678

33967

34291

 

WATCH OUT FOR:

 

SRF
 
DLF

 

 

 

 

 

 

Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

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